Why is financing a domain name not a thing?

[The Domainiac]

I've seen companies that offer financing to people when they use a domain as collateral, but why have I not seen companies that will buy a domain on your behalf and let you make payments?

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Related companies:

• DomainCapital
• inteLend
• Lendvo
• Lend.me

 

[hawkeye]

We're all waiting for you to start one up!

 

[jamesosix]

they will. Its called a bank or a credit union or a loan company

 

[Chris Wright]

It's very risky. Can you imagine doing the same for someone?

The domain market is quite inefficient compared to other markets.
That makes it less liquid.
Efficiency / liquidity create the stability that is needed for 3rd party financing.
But the same market inefficiency also makes space for greater intermediation (domainers).

 

[The Domainiac]

they will. Its called a bank or a credit union or a loan company

Bank: Hello, sir. How can I help you today.
Me: Yes I would like a loan in the tens of thousands please.
Bank: Buying a house?
Me: No, I want a portfolio of domain names.
Bank: Hahahahahahaha

 

[biggie]

I but why have I not seen companies that will buy a domain on your behalf and let you make payments?

you can buy a domain from me and i'll let you make payments

 

[jamesosix]

Bank: Hello, sir. How can I help you today.
Me: Yes I would like a loan in the tens of thousands please.
Bank: Buying a house?
Me: No, I want a portfolio of domain names.
Bank: Hahahahahahaha

Bank wouldnt refuse it aslong as they can see on paper you have the means to pay the loan back.

You do know banks lend for more than just houses right?

 

[The Domainiac]

Yea, I know but I was just having fun with that hypothetical situation.

But what if you wanted to purchase a LLL.com for $xx,xxx. Who has the assets to back up such a loan?

 

[jamesosix]

I know

But essentially whoever fronts $xx,xxx is going to want to see some way of that being repaid. Whether its a bank, mum & dad, best mate etc..

The truth is, no company in the world would front a $xx,xxx figure purchase, without some evidence they will not lose that money.

 

[mhdoc]

Having spent several years in the sub-prime auto loan industry I see two immediate problems.

1. I think it would be extremely hard to find someone in the lending industry willing to make large loans secured by a domain name. They would have to know enough to be confident of the value, they would have to convince their associates that was the case, they would worry about potential losses due to fraud & hacking. Anyone willing to lend in this environment will expect to be paid a yield that rewards their perceived risk.

2. Most of the domainers looking this kind of loan will have a MUCH lower estimate of the risks. They probably also are only familiar with consumer lending and don't realize how heavily subsidized house loans and card loans are.

The result is a huge gap between loan terms borrowers would find reasonable and those a lender would insist on.

For example, if your credit is trashed and you buy need to buy a car from "Joe, The Walking Man's Friend". you will be looking at 20% cash down and a loan at 32% APR for 36 months. Joe will immediately sell that contract to a captive finance company for 75% of the face amount. The finance company will assume about 25% of the loans will default at some point.

Most will do better talking to dad, grandma, etc.

 

[forge]

Most will do better talking to dad, grandma, etc.

Could I get the phone number for your dad and grandma?

 

[The Domainiac]

All valid points as to why a lending company or bank would not be the ideal lender.

This is why there needs to be a company who is well versed in the domain industry to make this happen.

The company could require a certain percentage of total purchase price up front before they put the money up. Also, they hold the domain in their portfolio and park it and collect all revenue until the buyer has paid in full.

 

[Kate]

The problem is that domain names are not liquid assets.
Cars or homes can be repossessed and resold at short notice at a predictable price.
With domain names: more difficult.

PS: I think you can do escrow with monthly installments, so the payment can effectively be spread across a certain number of months.

 

[equity78]

In the domain business some sellers will provide seller financing, there are some who lease and some who let people pay as they go, like layaway. Miss a payment or two and they keep the domain and the payments.

What is key is the legal agreement that the buyer and seller agree to.

There is DomainCapital.com

Domain Capital is the first and only financial services company to offer financing to businesses based on the inherent and recognized value of premium domain names. Our vision is to innovate exciting new financial products and services designed to enable entrepreneurs to exploit new business models.

Domain Capital's services are designed for:

1. Existing domain name owners who need a ready source of asset-based, working capital.
   
2. Prospective domain name owners who wish to acquire premium domain names for their own use or to trade in the domain name aftermarket: An important source of leveraged capital, reduced time to market, a partner with an understanding of the Internet.
   
3. Internet registry and transaction brokers: Domain Capital shortens the sales cycle and provides a potential source of high margin revenue, while it provides an important, value-added service to their clients.

http://domaincapital.com/

 

[Lendvo Domain Financing]

Domain Financing is a thing! We offer domain financing for both buyers and sellers. Please get in touch for domain financing questions or to see if you qualify. Lendvo.com

 

[Sukhvir-Singh]

Any investor who wants to go in this niche can use any premium domain name like LendNames.com to enter into the industry to grow as leader and it has huge scope!!

 

[Miguelmateos]

Have you checked domainequity.com

 

[lock]

Afterpay and paypal do installments not that is good for domains.

 

[StartupNames]

Interesting!

 

[Surya Giri Kurniawan]

Loan amount approval is very depend to Appraisal Value of the Collateral. So which appraisal they will use to give a domain loan : Godaddy , Estibot, Nameworth, or other?